from the bogus-patents dept

Over the last few years it's been great to see companies like Newegg and Rackspace decide that they're not going to give in to bogus patent troll lawsuits. As we've discussed, it's almost always easier, faster and cheaper to just settle and pay up whatever the troll is asking for. That's part of why trolling works. Fighting a patent lawsuit -- even a totally bogus one (i.e., not infrigning) -- on a clearly invalid patent will still cost many hundreds of thousands, if not millions, of dollars. If the troll is offering to settle for tens of thousands of dollars, many, many companies will do the obvious short-term cost-benefit analysis and settle. It's hard to directly fault them for this -- but it only makes the problem worse for everyone else. Not only does it fund the patent trolls to keep suing others, often they'll use some of that money to buy more bogus patents and shake down companies over that new ones as well. On top of that, settling patent threats just puts a big "sucker" sign on your company, meaning that more trolls will start circling. Making a stand and saying that you will not compromise or deal with trolls actually helps in the long run by scaring off some trolls. Both Newegg and Rackspace have been getting a lot of publicity (and goodwill) for their anti-troll efforts.

Rotatable owned a patent that it claimed covers the screen rotation technology that comes standard in just about every smartphone. You know, when you flip your device sideways and the screen shifts orientation from portrait mode to landscape mode? Like nearly all the apps in the Apple and Android app stores, Rackspace uses standard functionality provided by Apple’s libraries and Android open source software to provide this display feature in our mobile cloud applications.

Rotatable sued us and immediately asked for $75,000 to go away. We refused. And we fought. It’s Rackspace policy to not pay off patent trolls, even if it costs us more to fight. Eventually Rotatable offered to just walk away – but we refused again. Just as we promised last year, we challenged the patent and the USPTO invalidated it.

As Rackspace says, the company is now "an ex-patent troll." Kudos to Rackspace for fighting and winning, rather than giving in to the troll.

from the lots-of-ways-to-be-wrong-and-Typo-found-most-of-them dept

Ryan Seacrest's Typo (because it is never to be referred to simply as "Typo" in headlines or opening paragraphs), maker of physical keyboard accessories for iPhones, was sued by RIM (maker of formerly-popular Blackberry phones) for patent infringement earlier this year. The ailing phone manufacturer took issue with the keyboards made by Ryan Seacrest's Typo, which it felt veered a bit too close to "looking damn near like a Blackberry keyboard."

On Thursday, U.S. District Judge William Orrick agreed to let BlackBerry proceed with contempt of court proceedings after the Canadian phone maker showed that Typo has been selling keyboards in violation of the earlier order.

“I am very concerned with what appears to be deliberate contempt of the preliminary injunction by Typo,” wrote Orrick, pointing out that the company shipped around 15,000 keyboards despite the ban.

The court order touches on a lot of seeming wrongdoing by Seacrest's Typo, including multiple shipments being sent to Canada, the Middle East and Asia (Typo claimed these foreign sales weren't bound by the injunction) and a large sale to a reseller (4,000 keyboards to SMI Investments -- a company that Typo seems to be intertwined with) that occurred after the injunction was ordered but before it went into effect.

Seacrest's keyboard company also went out of turn by asking the court to find that its modified keyboard does not infringe on RIM's patents.

According to [Judge] Orrick, the existence of a “supposedly non-infringing design” was not relevant to the existing injunction. The judge added that Typo would have to bring a separate court proceeding to get an order related to the new designs.

Whether or not you agree that RIM's patent infringement case has merit, Typo seems to have completely botched its response. Sure, all the cool kids and their acts of civil disobedience have netted them contempt charges over the years, but blowing off a preliminary injunction in this sort of case is hardly sticking it to The Man.

As for RIM, this lawsuit may be going its way, but it doesn't really change the fact that a competitor saw a market niche and filled it. People still like physical keyboards, but they don't seem to care much for Blackberries. If RIM wasn't so stuck on the "you only get the keyboard if you buy the phone" strategy, it might have been able to capture this market before anyone else got to it, rather than just play spoiler by suing anyone veering too close to its look-and-feel.

from the not-so-secret-anymore dept

A few years back, Microsoft trumpeted a series of high-profile licensing deals with manufacturers of smartphones and tablets whose Android-based products, it claimed, were infringing on its patents. As we pointed out, the deals proved nothing about the validity of that claim -- just that Microsoft and the companies concerned had come to some mutually-acceptable arrangement, of which nearly all details were kept secret. In particular, Microsoft refused to reveal which of its many patents it claimed were infringed upon by Android. This allowed it to point to the licensing deals as "proof" that Android was infringing without ever actually needing to demonstrate that in the courts. It could then go to other manufacturers and encourage them to sign up too, which of course strengthened its story yet further for the round of negotiations after that.

Unfortunately for Microsoft, China has just put a stop to that clever, self-sustaining approach by revealing the patents involved. Microsoft was required to list them as part of the approvals process by the Chinese Ministry of Commerce (MOFCOM) for the US company's acquisition of Nokia. As Ars Technica explains:

A list of hundreds of patents that Microsoft believes entitle it to royalties over Android phones, and perhaps smartphones in general, has been published on a Chinese language website.

The patents Microsoft plans to wield against Android describe a range of technologies. They include lots of technologies developed at Microsoft, as well as patents that Microsoft acquired by participating in the Rockstar Consortium, which spent $4.5 billion on patents that were auctioned off after the Nortel bankruptcy.

More specifically:

The Chinese agency published two lists on a Chinese-language webpage where it laid out conditions related to the approved merger. The webpage has an English version, but it doesn't include the patent lists. There's a longer list [MS Word Doc] of 310 patents and patent applications and then a shorter list [MS Word Doc] of just over 100 patents and applications that MOFCOM focused on.

Doubtless lawyers at many companies with products using Android are busy poring over those lists, which include US patent numbers as well as titles in English. At the very least, the release of these lists will make Microsoft's attempts to sign up new licensees much harder, since now companies will know exactly what Microsoft is claiming in this regard before they enter into any negotiations. Moreover, it's good news for the open source community, which is able to examine what claims Microsoft might be making about the free software elements of Android, allowing those to be challenged with prior art, say, or coded around.

But there's another important aspect here. Microsoft had managed to keep the lid on its secret anti-Android list of patents for many years. What changed things was the emergence of China as a sufficiently important market that the US company felt obliged to accede to the Chinese government's demands for a full list of the patents involved. The publication of the patent lists on the MOFCOM Web site is an indication that China will play by its own rules here, even -- or perhaps especially -- when it is dealing with what was once the world's most powerful computing company.

from the innovation-tax dept

Obviously, there have been an awful lot of patent lawsuits in the past few years concerning smartphones and various software and hardware associated with smartphones. The folks over at law firm WilmerHale have now released a paper, which conservatively (and thoroughly) estimates that the patent royalties that need to be paid by smartphone manufacturers currently exceeds $120 per device -- which they note is right around the price of the components themselves (found via FOSS Patents, which notes that the estimates in the paper almost certainly lowball the patent royalties, so they may be much higher). Basically, more than half the cost of making a smartphone these days is in paying off patent holders.

The authors of the paper are pretty clear that they don't even have data on many other parts of the smartphone where patent holders have demanded licensing payments, meaning the number is probably actually higher. Though, on the flipside, they admit that some companies likely negotiated lower rates in private than the "headline" rates that were publicly revealed. Either way, the $120 estimate is likely fairly conservative.

Talk about a massive tax on innovation -- that all of us are paying for.

And, of course, many of these fees are going to pure trolls, who have contributed nothing to making actual smartphones. The paper highlights the explosion of troll lawsuits in the past few years:

Though, to be fair, some of that is because of the America Invents Act of 2011, which made it more difficult for trolls to file a single lawsuit against multiple defendants, meaning that many started more lawsuits against individual defendants.

Either way, this should be seen as a massive problem. Rather than going towards innovation and better, more affordable products for the pubic, money is going to lawyers and patent trolls who have contributed nothing to society. It's a massive dead weight loss to the economy.

from the but-of-course dept

About a year and a half ago, we wrote about "Rockstar Consortium," a shell company set up by Apple and Microsoft (and a few other companies), in which they placed many of the patents they received when they outbid Google to get Nortel's patents. We noted at the time that one of the reasons regulators let Apple, Microsoft, RIM and others team up to buy these patents without it being an antitrust concern was that they promised that all the patents would be able to be licensed on "reasonable terms." Except... once they handed them off to Rockstar, that company's CEO, John Veschi, noted that this promise "does not apply to us."

So, in a move that surprises basically no one, Rockstar Consortium has sued Google along with most of the major Android phone makers (Asustek, HTC, Huawei, LG Electronics, Pantech, Samsung, and ZTE) claiming they violate a bunch of those old Nortel patents. This is yet another example of the obnoxious practice of privateering patents, where operating companies shuffle patents off to troll shell companies, to avoid having countersuits launched against their own products. It's pretty obvious that the lawsuits, two of which are listed below, are nothing more than Microsoft and Apple trying to put a dent in Android.

This has nothing to do with patents as innovation, and everything to do with patents trying to stifle competition. Again.

from the 2185-EXPLOITABLES!-NIB!-BID-NOW!!! dept

Well, if it wasn't clear before, it's certainly official now. Unwired Planet (formerly Openwave), a former innovator in the WAP browser field, decided back in April that it was no longer interested in competing in the marketplace. Instead, it set the dials to "troll" and announced a new "corporate strategy," one that would punish actual innovators for innovating. CEO Mike Mulica announced a "multi-pronged strategy to realize the value of [Unwired Planet's] unique patent portfolio."

Last week, Unwired Planet, a patent licensing company that once upon a time was an Internet services company called Openwave, announced a deal to acquire a portfolio of 2,185 U.S. and international patents and patents pending from Ericsson.

The company said the deal “significantly broaden[s] Unwired Planet’s Mobile Internet-focused portfolio,” including 753 U.S. issued patents related to 2G, 3G and LTE technologies. Ericsson will also contribute 100 additional patent annually to Unwired Planet from 2014 through 2018. Terms call for Unwired Planet to compensate Ericsson with certain ongoing rights in future revenues generated from the enlarged patent portfolio. Unwired Planet will also grant Ericsson a license to the Company’s enlarged patent portfolio.

In other words, Ericsson will profit from any litigation or settlements Unwired Planet manages to extract from tech companies. Pretty good money, if you don't mind being part of the problem. Mulica was on hand again to put lipstick on the troll-pig with plenty of words that dance around the shakedown-and-sue "business model" Unwired is calling a "corporate strategy" these days.

Unwired Planet CEO Mike Mulica said in a statement that his company looks forward to “leveraging a strong, multi-dimensional patent portfolio and furthering discussions with key industry players who are interested in licensing these inventions to protect and further build their product strategies.”

Well, just replace "leveraging" with "exploiting" and "furthering discussions" with "shakedown letters" and "interested in" with "forced to" and we've got ourselves a sentence! For that matter, let's replace "protect and further build" with "tentatively move forward in a highly litigious atmosphere, infested with tapeworms sporting UP/E logos."

The costs inflicted by the new hybrid tapeworm will, of course, be passed on to the end users in the form of increased costs, fewer innovations and East Texan accents. Ericsson will receive, in exchange for patents covering a broad swath of "telecommunications infrastructure" (and part of its soul reputation), 20% of the first $100 million, increasing to 70% should Unwired be able to hit the $500 million mark. Unwired has already fired an opening salvo in the direction of Apple and Google, so the sky's the theoretical limit.

In addition, America itself will be blessed with several million more reasons for newly minted lawyers to embrace the patent field, which despite the best (but still very poorly done) efforts of the US government, still offers a good chance to make big money by doing little more than spamming successful companies with threatening letters.

Hell there are entire lists of similar platforms, and those lists appear to have been created before this patent was applied for. What is the USPTO doing over there?

Patent system defenders will immediately jump in to say that a patent is really all about its claims, but go take a look at those ridiculously broad claims. Claim number 1 is the main claim here, and what it describes is nothing special at all. It's just a simple web-based platform for developing mobile apps that can run on a variety of mobile platforms.

That's not new. Companies, like the now apparently defunct Whoop were doing exactly that years ago. Just the very concept of a simple platform for app development (even cross-platform app development) isn't even close to new. Such things have been around for ages. How can someone honestly think that this is "new" and not "obvious."

And yet Appsbar (which at least does offer a product) now not only holds this patent, but the press release was put out as way of announcing its plans to enforce the patent vigorously:

“We are proud that the U.S. Patent and Trademark Office recognizes the innovative and proprietary set of features offered by Appsbar and we plan on strictly enforcing our patent with other companies that currently provide similar types of services,” said Scott Hirsch, founder and CEO, Appsbar. “Until Appsbar, novice tech users, small businesses, general consumers and more had to rely on an entire internal design and software team or hire a costly agency for the design, creation and publication of apps.”

First off, the second half of that quote? Not true. I remember a few years ago we developed a Techdirt app using one of these platforms. It took all of about 10 minutes of playing around on some website. As for the first half, the fact that even they admit that there are a bunch of other companies already in this space basically shows that this patent is covering an old idea that is quite obvious at this point.

So if we're looking at how to fix the patent problem, can we at least start with this simple concept: stop approving completely ridiculous patents like this one.

from the one-would-help dept

While the Apple patent disputes with Samsung and Motorola seem to get most of the publicity, Apple's first patent lawsuit against an Android phonemaker was against HTC, who quickly sued back. However, over the weekend, the two companies announced a settlement in which they're cross-licensing all of their patents to each other for a period of ten years. While the full details are secret, all of the indications are that HTC is paying Apple, but not a huge amount. HTC has said that it won't have "an adverse material impact" on its financials. While HTC remains a smaller player than Samsung, one hopes that this is actually a sign that Tim Cook has realized that Steve Jobs' infatuation with killing Android in court is not a productive strategy. This, of course, won't end many of the other patent fights around smartphones, but hopefully it shows that Apple has become less ridiculously "religious" about fighting in court, rather than focusing on the marketplace.

from the patent-thicket dept

A few years back we created a graphic to highlight the ridiculous patent thicket around smartphones. It really just highlights some, though not all, of the litigation concerning patents related to smartphones.

That image is a bit out of date, with some cases settled, others completed, and many more filed, of course. Note the lack of anything between Samsung and Apple for example. But, of course, patents in litigation are just one aspect of a patent thicket. Plenty of patents are used just to demand licensing fees, but are never actually used in litigation. And plenty of patents don't show up in litigation at all, but can still represent part of the problem of the thicket.

A new analysis shows just how insane the patent thicket is today. Done by "defensive" patent aggregator RPX (they try to position themselves as the "good" version of Intellectual Ventures), the estimate is that a stunning250,000 active patents today impact smartphones. 250,000. As the article notes that's one in six active patents today -- and for an industry that is certainly less than 1% of US GDP. As a comparison, the pharma industry, often put forth (inaccurately, in my opinion) as an area where patents make sense, has accounted for a little over 6% of US patents over the past 15 years. Also, there's this:

... in the pharmaceutical industry, there are approximately 46.8 patents per every 1,000 jobs, whereas in the computer and peripherals equipment sector, there are 277.5 patents per 1,000 jobs. Even the semiconductor industry, known for its highly complex products, has a patent/job ratio of 111.6 patents per 1,000 jobs -- approximately 40% the rate of patents to jobs as the computer and peripherals market.

It definitely appears that there's something of a "bubble" going on around smartphone patents -- which is what happens when you have a hot emerging area, combined with ridiculously broad patents. It also makes for an astounding minefield for anyone new who wants to enter the space, especially if you don't have a massive war chest to license or fight in court.

from the speak-out dept

About a dozen years ago, Amazon's Jeff Bezos (taking a fair amount of criticism for his one-click patent) helped fund a project called BountyQuest, which offered up prize money for those who were able to bust bogus patents. To his credit, the first patent they put forth was Bezos' own one-click patent -- except then very little happened, and BountyQuest faded away. While it has occasionally used its own patents (such as suing B&N over that one-click patent), Amazon tends to be on the receiving end of tons of ridiculous patent lawsuits, leading Bezos to speak out about the broken patent system yet again in an interview with the UK publication Metro:

"Patents are supposed to encourage innovation and we’re starting to be in a world where they might start to stifle innovation. Governments may need to look at the patent system and see if those laws need to be modified because I don’t think some of these battles are healthy for society. I love technology, I love invention, I like rapid change, and really it’s the golden age of wireless devices and mobile devices."

I'd argue that the "starting to" understates where we are in this process. There's significant evidence that the problem has been around for a long, long time already. Of course, I'm curious just what kind of legislation Bezos thinks is right. Having his voice added to the debate on patents certainly would be helpful, given how so many in Congress still seem to think that there isn't a real problem here.